Thursday, May 31, 2012

If the fate of Detroit doesn't show you what's in store, nothing will.Does this sound like "The richest country on earth?"

Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating almost half its streetlights.

As it is, 40 percent of the 88,000 streetlights are broken and the city, whose finances are to be overseen by an appointed board, can’t afford to fix them. Mayor Dave Bing’s plan would create an authority to borrow $160 million to upgrade and reduce the number of streetlights to 46,000. Maintenance would be contracted out, saving the city $10 million a year.

Other U.S. cities have gone partially dark to save money, among them Colorado Springs; Santa Rosa, California; and Rockford, Illinois. Detroit’s plan goes further: It would leave sparsely populated swaths unlit in a community of 713,000 that covers more area than Boston, Buffalo and San Francisco combined. Vacant property and parks account for 37 square miles (96 square kilometers), according to city planners.

There’s already experience snuffing out streetlights within Detroit’s borders. Highland Park, a 3-square-mile city encircled by its larger neighbor, removed 1,100 of 1,600 streetlights last year, after piling up a $4 million debt to DTE Energy. The move saves $45,000 a month, said Alejandro Bodipo-Memba, a spokesman for the company.

Only major streets and intersections remain lit in the city of 12,000, once home to Chrysler Group LLC’s namesake car manufacturer and Henry Ford’s first moving assembly line. Mayor DeAndre Windom, 45, said residents at first complained, though few do now. He’s considering grants and private funding to relight darkened streets

Colorado Springs pulled the plug on 9,000 of its 25,600 lights in 2010 to save $1.3 million, said David Krauth, a city traffic engineer. Some were relit as revenue improved, though 3,500 remain dark, saving about $500,000 a year, he said.

In Detroit, some streets have no working lights. Many appear dim or are blocked by trees. And some areas with mostly vacant lots are well-lit.

In southwest Detroit, businesses on West Vernor Highway, a main commercial thoroughfare, have sought $4 million in private grants to fix the situation themselves. The state would pay $2.5 million, said Kathy Wendler, president of the Southwest Detroit Business Association.

Jamahl Makled, 40, said he’s owned businesses in southwest Detroit for about two decades, most recently cell-phone stores. He said they’ve have been burglarized more than a dozen times.

“In the dark, criminals are comfortable,” Makled said. “It’s not good for the economy and the safety of the residents.”

North of there, on a stretch of West Grand Boulevard, the bases of light poles show where thieves tore out the wiring.

As many as 15,000 Detroit streetlights use 1920s technology, according to a 2010 study by McKinsey & Co. Upgrading the system would cost $140 million to $200 million, and $5 million more to operate than the $23 million now spent annually, the report said.

Besides streetlights, the Detroit lighting department provides electricity to 144 customers that include Detroit schools, Wayne State University and local government offices. Almost 22 percent of the city’s electric bills were unpaid, the McKinsey report said.

That’s just one reason Detroit is digging out of a $265 million deficit and saddled with more than $12 billion in long- term debt. To avoid a state takeover, Detroit agreed in April to have its finances overseen by a nine-member board appointed by the city and the state.

There is little doubt that Detroit is ground zero for the parts of America that are still suffering. The city that was once one of the wealthiest in America is a decrepit, often surreal landscape of urban decline. It was once one of the greatest cities in the world. The birthplace of the American car industry, it boasted factories that at one time produced cars shipped over the globe. Its downtown was studded with architectural gems, and by the 1950s it boasted the highest median income and highest rate of home ownership of any major American city. Culturally it gave birth to Motown Records, named in homage to Detroit's status as "Motor City".

Decades of white flight, coupled with the collapse of its manufacturing base, especially in its world-famous auto industry, have brought the city to its knees. Half a century ago it was still dubbed the "arsenal of democracy" and boasted almost two million citizens, making it the fourth-largest in America. Now that number has shrunk to 900,000.

Its once proud suburbsnow contain row after row of burnt-out houses. Empty factories and apartment buildings haunt the landscape, stripped bare by scavengers. Now almost a third of Detroit – covering a swath of land the size of San Francisco – has been abandoned. Tall grasses, shrubs and urban farms have sprung up in what were once stalwart working-class suburbs. Even downtown, one ruined skyscraper sprouts a pair of trees growing from the rubble.

The city has a shocking jobless rate of 29%. The average house price in Detroit is only $7,500, with many homes available for only a few hundred dollars. Not that anyone is buying. At a recent auction of 9,000 confiscated city houses, only a fifth found buyers.

Dubbed 'Motor City', Detroit is the birthplace of the US car industry. Iconic auto companies like General Motors, Ford and Chrysler brought jobs and prosperity the Michigan city that was once America's fourth largest with nearly two million inhabitants. As those companies faced competition from auto manufacturers in Japan, Detroit endured a population exodus.

Detroit now boasts only about 700,000 residents, down 25% from 10 years ago. After an $80 billion (£51.5 billion) US government car industry bailout, Detroit is attempting to resurrect itself. But the abandoned homes and ballrooms, ruined factories and an empty, cavernous train station serve as daily reminders of the city's more affluent past.

For her book, Detroit: 138 Square Miles, photographer Julia Reyes Taubman spent seven years documenting what is left of Detroit. She argues its ruins are monuments to American innovation that must be preserved.

In days gone by, price tags were simple. An apple cost 10 cents.A cup of coffee cost $1. But today, the consumer marketplace is far more complicated, giving sellers the opportunity to create confusion. Many items have follow-up costs that make the original price tag meaningless.

Computer printers are the classic example. You might get a great deal on a printer, but if the ink is expensive, you lose in the end. In fact, Gabaix argues that it's impossible for consumers to intelligently shop for printers. No consumer knows how much ink costs -- the cartridges don't come in standard sizes, the amount of ink used to print varies and ink costs are unpredictable. That makes the true price of a printer "shrouded," in Gabaix's terminology. Not quite hidden, but not quite clear, either.Advantage seller. It's easy for printer companies to lowball printer price tags and overcharge for ink, enabling them to print money.

If you think about it, shrouded price tags are everywhere. The hotel website might say "$99 a night" but you know the bill will be more like $120 or $130. Pay TV companies promise $30-a-month service, which ends up costing more like $50. And what happens when you buy a TV with a store credit card that offers an upfront discount but a complex interest charge? And so it goes.

Consumers complain about this constantly. That's the basis of the Red Tape Chronicles in fact. At its best, the maddening mixture of coupons, rebates, sales and fine print fees can feel like a game. At worst, it's being cheated. You'd think shoppers would love a chance to buy from a store that doesn't play these games, the way car buyers (allegedly) like shopping at no-haggle auto dealerships.

They don’t, says Gabaix, and Penney should have known better.

“I think it was an ill-advised move,” he said.

All this price manipulation is really an information war, he says. Shoppers hunt for the tricks that let them save money. Stores hide booby traps that let them take money. It's a bad system, one I've labeled "Gotcha Capitalism." But it is the system we have now.

That explains why I pay 42 dollars month for my 25 dollar a month cell phone plan. At least I’m not locked into a long term contract. Say, aren't transparent pricing and perfect knowledge key aspects of economic modelling? Is there anywhere in the economy where you pay a fair and honest price for a product or service?

One of the main criticisms of consumer-driven health care is that, today, consumers have no way of figuring out how much a particular health care service costs. Indeed, one of the reasons that health care is so expensive in America is because people have no idea what they’re paying for it. Hence, it’s important for reformers to encourage hospitals and doctors to become more transparent about the prices they charge for these services. But an Arizona bill to do just that was killed—by the state’s Republican legislature.

Yesterday, Chad Terhune of the Los Angeles Times told the story of Jo Ann Synder, a woman who was charged $6,707 for a CT scan, after she had undergone colon surgery. Her insurance plan, Blue Shield of California, billed her for $2,336, and paid for the rest. But Snyder was shocked to discover that, if she had paid for the scan herself, out-of-pocket, she would have only had to pay $1,054.

“I couldn’t believe it,” she told the Times. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”

Los Alamitos Medical Center, Terhune found, charges $4,423 for an abdominal CT scan. Blue Shield’s negotiated rate is about $2,400. But Los Alamitos told Terhune that its cash price for the scan would be $250.

And a few weeks ago, Thomas Friedman wrote a column about How our entire society has become a market society where absolutely everything can be bought and sold. Now it’s Nicholas Kristoff’s turn:

... how far do we want to go down this path?

• Is it right that prisoners in Santa Ana, Calif., can pay $90 per night for an upgrade to a cleaner, nicer jail cell?

• Should the United States really sell immigration visas? A $500,000 investment will buy foreigners the right to immigrate.

• Should Massachusetts have gone ahead with a proposal to sell naming rights to its state parks? The Boston Globe wondered in 2003 whether Walden Pond might become Wal-Mart Pond.

• Should strapped towns accept virtually free police cars that come laden with advertising on the sides? Such a deal was negotiated and then ultimately collapsed, but at least one town does sell advertising on its police cars.

“The marketization of everything means that people of affluence and people of modest means lead increasingly separate lives,” Sandel writes. “We live and work and shop and play in different places. Our children go to different schools. You might call it the skyboxification of American life. It’s not good for democracy, nor is it a satisfying way to live.”

“Do we want a society where everything is up for sale? Or are there certain moral and civic goods that markets do not honor and money cannot buy?”

Where would this stop? Do we let people pay to get premium police and fire protection? Do we pursue an idea raised by Judge Richard Posner to auction off the right to adopt children?

We already have tremendous inequality in our country: The richest 1 percent of Americans own more wealth than the bottom 90 percent, according to the Economic Policy Institute. But we do still have a measure of equality before the law — equality in our basic dignity — and that should be priceless.

“Market fundamentalism,” to use the term popularized by George Soros, is gaining ground. It’s related to the glorification of wealth over the last couple of decades, to the celebration of opulence, and to the emergence of a new aristocracy. Market fundamentalists assume a measure of social Darwinism and accept that laissez-faire is always optimal.

That’s the dogma that helped lead to bank deregulation and the current economic mess. And anyone who honestly believes that low taxes and unfettered free markets are always best should consider moving to Pakistan’s tribal areas. They are a triumph of limited government, negligible taxes, no “burdensome regulation” and free markets for everything from drugs to AK-47s.

If you’re infatuated with unfettered free markets, just visit Waziristan.

Cyclist Larry Vega said there was "blood all over the place" when he came across the horrific scene by MacArthur Causeway.

"I told him get off," Mr Vega told WSVN Fox 7. "The guy just kept eating the other guy away like ripping his skin." He said he alerted a police officer, who warned the attacker several times to back away from the victim. "The guy just stood his head up like that with a piece of flesh in his mouth and growled," Mr Vega said.

The victim, identified as a 65-year-old homeless man, Ronald Poppo, remained in a critical condition in hospital on Tuesday. A Miami police spokesman said: "We are expecting a report from our detectives to give more details to the media. We are also looking for more witnesses to this crime."

Armando Aguilar, of Miami's Fraternal Order of Police, told the Associated Press: "He had his face eaten down to his goatee. The forehead was just bone. No nose, no mouth."

Forty-nine mutilated bodies have been found dumped by a roadside near the city of Monterrey in northern Mexico.
Security officials said the 43 men and six women had been
decapitated and had their hands cut off, making identification
difficult.

And that's just for starters. There are so many stories from all across the country:

So despite our so-called "progress," it seems industrial civilization is every bit the equal, if not superior to past civilizations for levels of sickness and depravity. At least the Aztecs who tore the hearts out of their victims could claim superstition - that they actually believed they were renewing nature by their sacrifices - something we cannot claim.

Seriously, can we say industrial civilization has reached a level of sickness and depravity heretofore unimaginable? I mean, how much worse does it have to get?

What have we done?

Some will say these are just "isolated incidents" and they don't mean anything except for a few sick people. But society has been getting sicker and sicker hasn't it? Behavior so shocking as to be considered inhuman just a few years ago has become the norm. Why do we ignore the signs? Is there not a message here, this month of May 2012?

Many ancient prophecies talk of a Kali Yuga - an age of destruction
when human civilization spiritually degenerates. Where the fundamental bonds between humanity become untethered and humans
behave like animals. I think a man chewing off another man's face while growling like a wild animal qualifies, don't you? Such warnings have been posted by seers since the
very beginnings of civilization. I'm not a superstitious person by nature, but I have to wonder if we're fulfilling the prophecy. If we're finally plumbing the depths of societal depravity.

I think people secretly, deep down in their hearts know that civilization is unraveling. They feel lost and without hope. They feel a sense of disgust at what they've become in the pits of their stomachs, even if their rational mind tries to tell them that everything's all right. Dmirty Orlov, in his five stages of collapse model, identifies cultural collapse as the final stage.

I think we've reached it. How can we not see what a sick society we're become?

And that's why I think people are attracted to the collapse narrative. They want this to all go away. They want to be human again. When will this blood-drenched Babylon, that manipulates all our basest impulses and worst human instincts and desires with abandon, finally crawl off to die in a fetid corner of the swamp that spawned it? When will this nightmare end?

Wake me when it's over...

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

NAMPHO, North Korea (AP) — North Korea is reporting a serious drought that could worsen already critical food shortages, but help is unlikely to come from the United States and South Korea following Pyongyang's widely criticized rocket launch.

North Korea has had little rain since April 27, with the country's western coastal areas particularly hard hit, according to a government weather agency in Pyongyang. The dry spell threatened to damage crops, officials said, as the country enters a critical planting season and as food supplies from the last harvest dwindle.

In at least one area of South Phyongan Province where journalists from The Associated Press were allowed to visit, the sun-baked fields appeared parched and cracked, and farmers complained of extreme drought conditions. Deeply tanned men, and women in sun bonnets, worked over cabbages and corn seedlings. Farmers cupped individual seedlings as they poured water from blue buckets onto the parched red soil.

"I've been working at the farm for more than 30 years, but I have never experienced this kind of severe drought," An Song Min, a farmer at the Tokhae Cooperative Farm in the Nampho area, told the AP.

It was not clear whether the conditions around Nampho were representative of a wider region. The U.N. Food and Agriculture Organization said it had not yet visited the affected regions to confirm the extent and severity of the reported drought.

ROBRES, SPAIN—Fernando Luna, a burly Spanish farmer, yanks a barley sprout from a field as dry as powder. He examines its roots, which are mostly dead, then tosses the stunted shoot away in disgust.

“Worthless! This is worthless!” Luna shouts.

Spain is suffering through its driest winter in more than 70 years and bailed-out Portugal next door is in similar straits. Thousands of jobs and many millions in agricultural output are in jeopardy.

Both nations are desperately short of so much: tax revenues, bank credit, jobs, hope for the future. Now, it won’t even rain.

The landscape in northern Spain is now a palette in shades of ugly. Pale brown fields without crops or pasture stretch off into the distance. A pond for watering sheep has shriveled into a dustbowl. An irrigation canal down the road holds only stagnant water, murky from so much sediment and so little flow.

Luna waves this way and that, distraught over fields he says are doomed to yield zero harvest.

The hosepipe ban covering much of southern England could continue into next year, water companies warned on Monday.

The ban is due to come into force this Thursday, and will remain in place regardless of how much rain falls over the next few months. It is part of a series of measures being put in place to tackle England's drought, which last week spread to Yorkshire.

A spokeswoman for Veolia Water, one of the seven companies imposing the ban, said: "We're almost certain that the ban will be throughout the summer and possibly to the end of the year."

She admitted that if rainfall stayed low over the coming winter, they would be forced to consider extending the hosepipe ban into 2013. "It would stay in place until we felt that it was appropriate to take that off."

The drought has been caused by exceptionally low rainfall during the key winter and spring months known as the "recharge period". For the last two years, rainfall during this time has been 60% of normal levels, leaving river levels as low as they were during the drought of 1976.

It's seems it's hard to find a country anywhere where something like this is not going on. I wonder if all of this is a part of the Agenda 21 World Socialist Conspiracy as well. Will the effect on agricultural yields be an even bigger concern than Peak Oil in the near term?

And a few posts ago, I wrote about how a die-off is not likely to be some grand apocalyptic event, but a million little tragedies out of sight of the media, a slow decaying of the quality of life for the majority of citizens preventing any kind of coherent action:

"... What brought this thought about was reading the heartbreaking article: Suicides in Greece increase 40%. And I remembered a comment I head from Dmitry Orlov in an interview about how much of his high school class were now dead. Yet there were no headlines and there was never any official crisis or emergency. They did not die in gunfights over scraps of food like in The Road. Rather, more quotidian things like alcoholism, unemployment, suicide, homelessness, exposure, lack of medications and ordinary sicknesses like bronchitis and pneumonia took their lives. Russia's life expectancy fell dramatically. It's birth rate declined. Public health fell apart. Suicide rates went up. The population shrank. Entire towns became abandoned. In post-collapse Russia there was a slow die-off that occurred outside of the daily headlines that no one seemed to notice. They were ground down slowly by day-to-day reduction in the standard of living, a million little tragedies that, like pixels in an image, looked like nothing until the focus was pulled back."

Add to that another one - deaths caused by increasing global temperatures. Here's Treehugger:

A new report from NRDC that finds that thanks to climate change, most American cities will be seeing an exponential uptick in heat-related deaths (Mat took a look at it here). The conclusion shouldn't be much of a shocker—as the world heats up, more people will perish from that heat. The report, Killer Heat, finds that "more than 150,000 Americans could die by the end of this century due to the excessive heat caused by climate change."

As the NRDC notes, "Illnesses that are caused or made worse by extreme heat -- including heat exhaustion, heat stroke, cardiovascular disease, and kidney disease -- currently lead to hundreds of deaths each year." Well over a thirteen hundred Americans die from the heat every year as it is, and that number will soon balloon to over 4,500. The report is focused only on cities because that's where most of heat-related deaths occur. Kate Sheppard explains over at Mother Jones:

asphalt and glass amplify the heat and the dense population leaves more people vulnerable. Thirty-seven of 40 cities studied will see increases in heat-related deaths, [the researchers] predict. The hardest hit will be Louisville, Detroit, and Cleveland, researchers found. The average number of deaths in Louisville was 39 per summer from 1975 to 2004. That figure is expected to grow to 257 per summer by mid-century and to 376 by 2100.

Certainly rolling brownouts shutting off the electricity for air conditioners won't help that. Take a cue from the newly reactor-less Japan and dress for the weather. And if the heat doesn't get you, maybe the new diseases will:

A little-known life-threatening illness caused by blood sucking insects has been labelled the ‘new AIDS of the Americas’ by experts. The parasitic illness called Chagas Disease has similarities to the early spread of HIV, according to a new study.

Similar to AIDS, Chagas is difficult to detect and it can take years for symptoms to emerge, according to experts writing in the journal PLOS Neglected Tropical Diseases. An estimated 10 million people worldwide are infected with most sufferers in Bolivia, Mexico, Columbia and Central America, as well as approximately 30,000 people in the U.S., reported the New York Times.

Less than 5km (two miles) from central Nairobi lie the smouldering
mountains of rubbish thrown away by the residents and businesses of the
Kenyan capital. Dandora is one of Africa's largest dumping and
scavenging grounds. Every day thousands of slum dwellers try to eke out a
living. This man took nearly three hours to fill his last bag of the
day - and he hopes to sell the contents, which are mostly scraps of
rubber, for $0.50 (£0.30). People rummage through the filth, sorting into large sacks the materials
that cannot be eaten - but can be sold for recycling. Metals, rubber,
milk bags, plastics, meat bones, and electronics are some of the most
sought-after recyclables. The Nairobi city council does not officially
condone this informal system of recycling, which helps to manage the
dump.

Ancient Egypt and Mesopotamia may be the best known of the first great urban cultures, but the largest was the Indus or Harappan civilization. This culture once extended over more than 386,000 square miles (1 million square kilometers) across the plains of the Indus River from the Arabian Sea to the Ganges, and at its peak may have accounted for 10 percent of the world population. The civilization developed about 5,200 years ago, and slowly disintegrated between 3,900 and 3,000 years ago — populations largely abandoned cities, migrating toward the east.

"They had cities ordered into grids, with exquisite plumbing, which was not encountered again until the Romans," Giosan told LiveScience. "They seem to have been a more democratic society than Mesopotamia and Egypt — no large structures were built for important personalitiess like kings or pharaohs."

Like their contemporaries in Egypt and Mesopotamia, the Harappans, who were named after one of their largest cities, lived next to rivers. "Until now, speculations abounded about the links between this mysterious ancient culture and its life-giving mighty rivers," Giosan said.

Now Giosan and his colleagues have reconstructed the landscape of the plain and rivers where this long-forgotten civilization developed. Their findings now shed light on the enigmatic fate of this culture.
"Our research provides one of the clearest examples of climate change leading to the collapse of an entire civilization," Giosan said.

Initially, the monsoon-drenched rivers the researchers identified were prone to devastating floods. Over time, monsoons weakened, enabling agriculture and civilization to flourish along flood-fed riverbanks for nearly 2,000 years. Eventually, these monsoon-based rivers held too little water and dried, making them unfavorable for civilization.

"The Harappans were an enterprising people taking advantage of a window of opportunity — a kind of "Goldilocks civilization," Giosan said. Eventually, over the course of centuries, Harappans apparently fled along an escape route to the east toward the Ganges basin, where monsoon rains remained reliable.

"We can envision that this eastern shift involved a change to more localized forms of economy — smaller communities supported by local rain-fed farming and dwindling streams," Fuller said. "This may have produced smaller surpluses, and would not have supported large cities, but would have been reliable."
This change would have spelled disaster for the cities of the Indus, which were built on the large surpluses seen during the earlier, wetter era. The dispersal of the population to the east would have meant there was no longer a concentrated workforce to support urbanism.

"Cities collapsed, but smaller agricultural communities were sustainable and flourished," Fuller said. "Many of the urban arts, such as writing, faded away, but agriculture continued and actually diversified."
It remains uncertain how monsoons will react to modern climate change. "If we take the devastating floods that caused the largest humanitarian disaster in Pakistan's history as a sign of increased monsoon activity, than this doesn't bode well for the region," Giosan said. "The region has the largest irrigation scheme in the world, and all those dams and channels would become obsolete in the face of the large floods an increased monsoon would bring."

Tuesday, May 29, 2012

The wealthiest 1 percent of New York City residents took in nearly one-third of the personal income in the city in 2009 — almost double the comparable proportion nationwide, a new study shows.

In a report scheduled to be released on Monday, the city comptroller’s office found that large percentages of New Yorkers earned high incomes and low incomes, leaving a smaller middle class than in the nation as a whole.

“There is some evidence of the kind of common worry that New York has a weak middle,” said Frank Braconi, chief economist in the comptroller’s office.

The report analyzed tax filings by city residents for income earned from 2000 through 2009, the most recent data available, and compared them with the national numbers. All of the numbers were adjusted for inflation.

The most striking difference between New York and the rest of the United States, the report showed, was the concentration of earning power at the high end.

In 2009, nearly 15,000 filers reported adjusted gross income of $1 million or more. They accounted for less than half of 1 percent of the total number of filers, but they took in 26.7 percent of the income in the city. Nationally, people who earned at least $1 million in 2009 collected less than 10 percent of all the income.

Income was much more volatile for the wealthy than for other New Yorkers, the study found.

The average income for the bottom 99 percent of city residents rose from about $42,000 in 2000 to a high of about $50,000 in 2007, then fell back to about $47,000 in 2009.

The comptroller’s report also revealed that New York had a smaller bulge in its middle than the rest of the country. Nationally, about 31 percent of filers earned $50,000 to $200,000, and they took in 52 percent of all the personal income in the country. In New York, just 28 percent of filers fell into that income bracket, and they collected only 36 percent of all the personal income in the city.

Productivity — the amount of output delivered per hour of work in the economy — is often viewed as the engine of progress in modern capitalist economies. Output is everything. Time is money. The quest for increased productivity occupies reams of academic literature and haunts the waking hours of C.E.O.’s and finance ministers. Perhaps forgivably so: our ability to generate more output with fewer people has lifted our lives out of drudgery and delivered us a cornucopia of material wealth.

But the relentless drive for productivity may also have some natural limits. Ever-increasing productivity means that if our economies don’t continue to expand, we risk putting people out of work. If more is possible each passing year with each working hour, then either output has to increase or else there is less work to go around. Like it or not, we find ourselves hooked on growth.

What, then, should happen when, for one reason or another, growth just isn’t to be had anymore? Maybe it’s a financial crisis. Or rising prices for resources like oil. Or the need to rein in growth for the damage it’s inflicting on the planet: climate change, deforestation, the loss of biodiversity. Maybe it’s any of the reasons growth can no longer be safely and easily assumed in any of today’s economies. The result is the same. Increasing productivity threatens full employment.

One solution would be to accept the productivity increases, shorten the workweek and share the available work. Such proposals — familiar since the 1930s — are now enjoying something of a revival in the face of continuing recession. The New Economics Foundation, a British think tank, proposes a 21-hour workweek. It may not be the workaholic’s choice. But it’s certainly a strategy worth thinking about.

But there’s another strategy for keeping people in work when demand stagnates. Perhaps in the long run it’s an easier and a more compelling solution: to loosen our grip on the relentless pursuit of productivity.

Based on the fact that this has been on the Times most emailed list, I think this article has struck a nerve with people. I think there's a widespread sentiment that what he's saying is true. I'm quite pessimistic, however, that these ideas will have any chance of making an impact. Our productivity increasingly benefits our rulers rather than ourselves. They've managed to make us work harder and harder for less and less. Why would they want to upset that?

The story "Jobs may outstrip people" by Duane Marsteller of The Tennesseean illustrates a surprising dilemma the region faces. It is the same story in Detroit. That doesn't even include the promise of "Cloud Computing." Northeastern University Economist Barry Bluestone finds the same thing happening all over the place.

That's because each generation's size is shrinking. People are having fewer kids, a combination of more workplace opportunities for women and the high cost of having and raising children. And far from the image of the permanently sputtering economy, businesses are attracted to America for its skilled labor, dynamic infrastructure and purchasing power.

Short of a baby boom that would probably create more problems than solve for future generations, the best solution is to work hard to create more skilled labor. Yet a number of political solutions seem designed to slash aid to college students, increasing the chances of experiencing this economic nightmare.

“A zoologist who observed gorillas in their native habitat was amazed by
the uniformity of their life and their vast idleness. Hours and hours
without doing anything. Was boredom unknown to them? This is indeed a
question raised by a human, a busy ape. Far from fleeing monotony,
animals crave it, and what they most dread is to see it end. For it
ends, only to be replaced by fear, the cause of all activity. Inaction
is divine; yet it is against inaction that man has rebelled. Man alone,
in nature, is incapable of enduring monotony, man alone wants something
to happen at all costs — something, anything… Thereby he shows himself
unworthy of his ancestor: the need for novelty is the characteristic of
an alienated gorilla.”

Monday, May 28, 2012

Saturday, May 26, 2012

Why are some countries rich and others poor? This is a question that has bedeviled economists for centuries. A new book that attempts to explain this discrepancy is getting a lot of attention - Why Nations Fail by Daron Acemoglu and James Robinson. This book by two prominent economists ambitiously attempts to answer that fundamental question. Their answer, in a nutshell, is that some countries develop inclusive political institutions that lead to inclusive economic institutions where anyone has a fair shot at succeeding. Poor counties, by contrast, have political structures ruled by oligarchs, often family-centered, and thus develop extractive economic institutions, where economic growth is siphoned off by the elites for their own benefit, so people see no use in trying to get ahead. That's a vast oversimplification, of course, and I have not yet read the book. Matt Yglesias has a good summary of what this is like in practice:

The basic framework of the book is to lay out the relationship between economic institutions and political institutions. Some countries (Canada, Denmark, Japan) have "inclusive" political institutions and consequently develop "inclusive" economic institutions. When your economic institutions are inclusive, everyone gets a chance to go to school and learn, everyone has a chance to switch jobs or start a new business, and everyone has the opportunity to save and invest. But where countries have "extractive" political institutions they end up with "extractive" economic institutions. The president's wife's brother's son gets an exclusive license to import exercise machines (mostly used in hotel gyms since local people are too poor to use them) and earns a nice living do so free from competition. Eventually some eager beaver comes along and says, hey if this other guy is earning monopoly rents importing exercise machines then I'll just build some here domestically. But the eager beaver is naive. The exclusive import license isn't a coincidence, it reflects the president's wife's brother's son's privileged position in the political system. Smart hoteliers will know better than to buy from a competitor since it will only buy them regulatory trouble. Smart bankers will know that the new business is doomed and won't lend him money and even if it weren't doomed, lending him money would only buy them regulatory trouble. Eventually, the eager beaver's savvier wife will explain to him why the plan is doomed. Absent opportunity, human and physical capital stagnates and ambitious people focus their attention on climbing the ladder of corruption. Even if the President realizes that on some level he's running a counterproductively dysfunctional system, he knows that if he starts threatening the economic privileges of the people he counts on to support the regime that his own base will vanish.

So that's the story. To get rich you need to either land on a bunch of oil (Qatar) or else have the kind of inclusive institutions that allow for "creative destruction" and widespread opportunity. They don't deny that countries with extractive institutions (the Soviet Union in the 1950s, China in the 2000s) can grow rapidly, but this kind of extractive growth isn't sustainable.

There seems to be widespread agreement on this fundamental thesis, but according to to some others it overlooks a number of other key points, points where one would expect conventional economists to have blinders. As this review points out, you can't just talk about "property rights" without pointing out that who has property and how it's distributed matter a great deal too:

The authors place enormous emphasis on property rights, for example. But property, too, is fundamentally a political matter. The aristocrats who seized common land in 18th century England did so because they controlled parliament. They violated centuries of custom and practice because they could. The settlers who created a society of independent farmers in the American colonies did so because those very same English aristocrats were too far away to stop them. The violation of property rights in North America promoted widespread prosperity because it shifted economic opportunity from the few to the many.

And the exploitation of certain nations through "free trade" matters too:

The Koreans were strong enough politically to protect their native industries from foreign competition until they were able to compete. And rather than allowing domestic producers to enjoy easy profits behind tariff barriers, Korea's political elite drove them to modernise and export. All rich industrial countries have followed a similar path. In countries where the majority are poor, on the other hand, foreign interests often work with local elites in an arrangement that suits them both - but is a disaster for everyone else. Industry is strangled at birth and vast mineral and oil wealth finds its way offshore. It is odd that the authors don't feel able to set this out in plain terms.

This review concludes, pointing out that the wealth of countries is based on political factors, and these factors can change:

But the book is correct on the key point: Economic development is determined by political factors. We should all be relieved that the economics establishment is finally willing to acknowledge the fact.

And of course the point has implications for countries that have achieved general prosperity. In Europe and North America inequality has been growing for the past generation or so. In the United States, median hourly earnings have scarcely increased in real terms since 1972. Stock markets and executive pay, on the other hand, have boomed. More widely, in the rich, industrialised world, the percentage of GDP captured by all workers in the form of wages fell from 75 per cent in the mid-1970s to 66 per cent in the first decade of this century. For a generation now, the owners and controllers of capital - the financial sector in particular - have secured the lion’s share of the new wealth.

This steepening inequality is not inevitable; it is a political achievement. Like their ancestors in 18th century England, successive governments have crafted legislation and distributed state patronage in the interests of the wealthy and the well connected. The unions have been stripped of bargaining power and large companies have shifted both production and profits offshore. The state has paid for technology and then given it to private corporations. This new technology has reduced the need for unemployment and boosted profits. Meanwhile, the tax levied on large companies and rich individuals has fallen, and the rest of us have had to make up the shortfall through increases in sales taxes and cuts in public services.

One of the best reviews was by the noted scientist Jared Diamond, author of Guns, Germs and Steel, and Collapse. He sums up the authors' thesis in this way:

In particular, [the authors] stress what they term inclusive economic and political institutions: “Inclusive economic institutions…are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish.” ...Such inclusive economic institutions in turn arise from “political institutions that distribute power broadly in society and subject it to constraints…. Instead of being vested in a single individual or a narrow group, [inclusive] political power rests with a broad coalition or a plurality of groups.”...Inclusive economic and political institutions provide individuals with incentives to increase their economic productivity as they think best. Such inclusive institutions are to be contrasted with absolutist political institutions that narrowly concentrate political power, and with extractive economic institutions that force people to work largely for the benefit of dictators....While absolutist regimes with extractive economic institutions can sometimes achieve economic growth, that growth is based on existing technology, and is nonsustainable and prone to collapse; whereas inclusive institutions are required for sustained growth based on technological change. One might naively expect dictators to promote long-term economic growth, because such growth would generate more wealth for them to extract. But their efforts are warped, because what’s economically good for individual citizens may be bad for the political elite, and because economic growth may be best promoted by political institutions that would shake the elite’s hegemony.

He cites historical examples:

For example, in South Korea but not in North Korea people can get a good education, own property, start a business, sell products and services, accumulate and invest capital, spend money in open markets, take out a mortgage to buy a house, and thereby expect that by working harder they may enjoy a good life....South Korea recently, and Britain and the US beginning much earlier, do have broad participation of citizens in political decisions; North Korea does not. ..The ultimate development of inclusive political institutions to date is in modern Scandinavian democracies with universal suffrage and relatively egalitarian societies. However, compared to modern dictatorships (like North Korea) and the absolute monarchies widespread in the past, societies (such as eighteenth-century Britain) in which only a minority of citizens could vote or participate in political decisions still represented a big advance toward inclusiveness.

In their narrow focus on inclusive institutions, however, the authors ignore or dismiss other factors.

Diamond goes on to list those factors:

1. Some regions are richer because they literally had a head start. Large-scale agriculture - and the institutions that are created from it including civilization itself - happened much earlier in certain parts of the world with various natural advantages.

The various durations of government around the world are linked to the various durations and productivities of farming that was the prerequisite for the rise of governments. For example, Europe began to acquire highly productive agriculture 9,000 years ago and state government by at least 4,000 years ago, but subequatorial Africa acquired less productive agriculture only between 2,000 and 1,800 years ago and state government even more recently. Those historical differences prove to have huge effects on the modern distribution of wealth.

2. In areas colonized by European powers where native populations remained to exploit, the conquerors developed extractive institutions. In placed where Europeans had to do their own work, they created ones that rewarded hard work. Countries that are rich in mineral, agricultural or fossil fuel wealth are often paradoxically poor. This is because they are more likely to have extractive institutions put in place by societal elites. Countries without such resources realize that the only path to riches is to develop their human capital, and so create institutions to allow this to flourish (good schools, honest legal system, skilled bureaucrats, meritocracy etc.):

...in formerly rich countries with dense native populations, such as Peru, Indonesia, and India, Europeans introduced corrupt “extractive” economic institutions, such as forced labor and confiscation of produce, to drain wealth and labor from the natives. But in formerly poor countries with sparse native populations, such as Costa Rica and Australia, European settlers had to work themselves and developed institutional incentives rewarding work...The extractive institutions retarded economic development, but incentivizing institutions promoted it.

3. Tropical countries tend to be poorer because there are more tropical diseases like malaria and parasites that affect the population.

Tropical diseases differ on average from temperate diseases, in several respects. First, there are far more parasitic diseases (such as elephantiasis and schistosomiasis) in tropical areas, because cold temperate winters kill parasite stages outside our bodies, but tropical parasites can thrive outside our bodies all year long. Second, disease vectors, such as mosquitoes and ticks, are far more diverse in tropical than in temperate areas. Finally, biological characteristics of the responsible microbes have made it easier to develop vaccines against major infectious diseases of temperate areas than against tropical diseases; we still aren’t close to a vaccine against malaria, despite billions of dollars invested. Hence tropical diseases impose a huge burden on economies of tropical countries.

4. Tropical countries tend to be poorer because their agriculture is less productive overall:

First, temperate plants store more energy in parts edible to us humans (such as seeds and tubers) than do tropical plants. Second, diseases borne by insects and other pests reduce crop yields more in the tropics than in the temperate zones, because the pests are more diverse and survive better year-round in tropical than in temperate areas. Third, glaciers repeatedly advanced and retreated over temperate areas, creating young nutrient-rich soils. Tropical lowland areas haven’t been glaciated and hence tend to have older soils, leached of their nutrients by rain for thousands of years. Fourth, the higher average rainfall of tropical than of temperate areas results in more nutrients being leached out of the soil by rain. Finally, higher tropical temperatures cause dead leaves and other organic matter falling to the ground to be broken down quickly by microbes and other organisms, releasing their nutrients to be leached away. Hence in temperate areas soil fertility is on average higher, crop losses to pests lower, and agricultural productivity higher than in tropical areas.

5. Some countries have easy access to water to participate in global trade while others lack access:

It costs roughly seven times more to ship a ton of cargo by land than by sea. That puts landlocked countries at an economic disadvantage, and helps explain why landlocked Bolivia and semilandlocked Paraguay are the poorest countries of South America. It also helps explain why Africa, with no river navigable to the sea for hundreds of miles except the Nile, and with fifteen landlocked nations, is the poorest continent.

6. Some counties irreparably damage their natural resource base, leading to cycles of poverty:

Countries that excessively deplete their resources—whether inadvertently or intentionally—tend to impoverish themselves, although the difficulty of estimating accurately the costs of resource destruction causes economists to ignore it. It helps explain why notoriously deforested countries—such as Haiti, Rwanda, Burundi, Madagascar, and Nepal—tend to be notoriously poor and politically unstable.

He takes the authors to task for neglecting historical factors and the natural environment in their analysis:

Some countries, such as Britain and Japan, have such institutions, while other countries, such as Ethiopia and the Congo, don’t. To explain why, the authors give a just-so story of each country’s history, which ends by concluding that that story explains why that country either did or didn’t develop good institutions...But it’s obvious that good institutions, and the wealth and power that they spawned, did not crop up randomly. For instance, all Western European countries ended up richer and with better institutions than any tropical African country. Big underlying differences led to this divergence of outcomes. Europe has had a long history (of up to nine thousand years) of agriculture based on the world’s most productive crops and domestic animals, both of which were domesticated in and introduced to Europe from the Fertile Crescent. Agriculture in tropical Africa is only between 1,800 and 5,000 years old and based on less productive domesticated crops and imported animals. As a result, Europe has had up to four thousand years’ experience of government, complex institutions, and growing national identities, compared to a few centuries or less for all of sub-Saharan Africa. Europe has glaciated fertile soils, reliable summer rainfall, and few tropical diseases; tropical Africa has unglaciated and extensively infertile soils, less reliable rainfall, and many tropical diseases.

Although not the conclusion, this is a good summary:

These, then, are the main factors invoked to understand why nations differ in wealth. The factors are multiple and diverse. We all know, from our personal experience, that there isn’t one simple answer to the question why each of us becomes richer or poorer: it depends on inheritance, education, ambition, talent, health, personal connections, opportunities, and luck, just to mention some factors. Hence we shouldn’t be surprised that the question of why whole societies become richer or poorer also cannot be given one simple answer.

That said, there are a few omissions in Jared Diamond's review that I find surprising. I'm surprised Diamond didn't mention overpopulation and Malthusian constraints. Countries like Nigeria and Bangladesh with their enormous populations are certainly at a disadvantage. Countries like Iceland and Norway have high per capita incomes because of their low populations, and the small distance between representatives and the general populace helps prevent political and economic corruption (look at Iceland's response to the banking crisis).

Another omission by Diamond that surprises me is an exploration of the use of fossil fuel enabled technology. This allows wealth to be extracted from local communities and concentrated in relatively few hands, with the byzantine workings of the money system serving as a sleight-of hand. Without fossil fuels and technology, it's harder to concentrate wealth and transport it out of a community. Before fossil fuels, transporting goods from afar was a slow and difficult process, so economies, and political institutions, were semi-local and size-constrained. Now with the global economy and the Internet, the elites are able to command the resources and skilled labor of the entire world, and concentrate the resulting wealth in financial centers like Manhattan, The City (London), Shanghai, Dubai, and various offshore tax havens. Much national wealth centers around these areas.

Another omission is the timetable for the development of fossil fuel-based technology. Some countries, notably Western Europe, particularly Great Britain, and North America, had a huge advantage in the harvesting of fossil fuels and the adaptation of mechanized agriculture. Diamond mentions the age of various civilizations, but most modern wealth is also determined by the use of modern technology. This head start has obviously had a major role in which nations are rich and others poor. For most of history, China was the world's wealthiest and most technologically advanced nation. That diverged with the development in Western Europe of the joint-stock corporation, the scientific method, and the steam engine. In addition to institutions, this must also be considered. England's coal sources were relatively accessible in comparison to a country like Japan, which was a country very similar in institutional and political advancement. The European discovery of the Americas plays a role here too (the distance from Western Europe to North America is half that from Asia)

Genetic factors play a role too. Some societies have a greater portion of society with facilities in technical subjects like math and science. Africa, one of the poorest continents, has less genetic diversity than many other areas of the world, since it is the origin point of humanity before migration to other continents. This genetic diversity may play a role in making modern economies work. According to Gregory Clark, the recurrent plagues and famines through European history caused the upper class to have more surviving children, dispersing them through "downward mobility" into all walks of life - blacksmiths, butchers, colliers, etc. According to Clark, this played a role in England's escape from the Malthusian trap of greater populations gobbling up any accumulated surplus.

The other factor, and it's politically explosive, is religion. Countries where large amounts of people claim belief in a deity, pray, and attend religious services regularly tend to be poorer than those who have populations who say religion is not that important. This even holds true within countries - in the United States, the poorest and most backward states are those of the "Bible Belt" where religious fundamentalism is widespread. This goes hand-in-hand with political corruption, cultural backwardness, repression by elites, and poverty. Go into the poorest areas of any city and you're sure to see churches everywhere, as you will in poor rural areas. Why this is so is not understood.

Elites have always used religion to justify their rule, from the very first civilizations in ancient Egypt, Mesopotamia, China, and the Americas. Only the gods changed. Usually the leader spoke for the deity, or was himself a deity. Belief in the majority organized religion seems to be tightly correlated to authoritarian behavior throughout history for whatever reason. Religious beliefs seems to be correlated with acceptance of one's fate, submission to authorities and deference to elites. Religious populations tend to be very credulous of the leaders claims on their wealth, even if those claims are outrageous. They tend to be more susceptible to propaganda and the control methods used by elites. And they tend to be less likely to act up - they accept their lot in life even when elites run roughshod all over them. Thus, in religious countries, extreme concentrations of wealth and political corruption tend to be rationalized away. This might be because religious populations are not only more susceptible to strong, charismatic leaders and more credulous of the national leadership mythology. Another reason might be because they view the afterlife as more of a goal, and hence do not try and upset the order down here, which they believe is ordained by God. Latin America, the Middle East and Africa are all prime examples of this. Economists who have looked at this have found one major outlier - The United States. Thus it makes sense that the United States is rapidly devolving to the level of government and development it "should" be at considering the widespread fundamentalist religious beliefs of its population. See this.

Francis Fukuyama, in The Origins of Political Order, argues that societies that develop institutions based upon loyalty to the state, rather than kinship, tend to be more successful than ones where institutions are designed to benefit the genetic kinsmen of elites. On page 210, he says:

A number of political scientists have compared the early modern European state to organized crime. they mean that rulers of states seek to use their expertise in the organization of violence to extract resources from the rest of society, what economists call rents. Other writers use the term "predatory state" to describe a range of more recent developing world regimes like Zaire under Mobutu Sese Seko or Liberia under Charles Taylor. In a predatory state, the elites in charge seek to extract the highest level of resources they can from the underlying society and divert them to their own private uses. The reason these elites seek power in the first place is the access that power gives them to economic rents.

By contrast, bureaucratic institutions where merit rather than kinship is an important factor tend to have better outcomes and wealth creation.

It's no secret that wealthy oligarchs in the United States have been working double-time to dismantle it's inclusive institutions built in the past and replace them with predatory ones. This is why the US is looking less and less like Denmark, and more and more like a banana republic - a tiny group of plutocrats living like oriental pashas amongst widespread desperation and squalor. My own feeling is that as the global economy slows down due to the limits to growth and the imbalance between our archaic medieval money system and the real world of scarce resources, we will see inclusive institutions dismantled in every country all around the world in favor of extractive ones. Social mobility will no longer be achievable, and the institutions that made capitalism work will be dismantled in favor of ones beholden to elites. The elites will maintain a veneer of democracy, while taking ever more extreme measures to control the unruly population that they are looting, as described here many times. Inclusive institutions will increasingly be seen as a threat to their power, and will be crushed or rendered impotent. All of this will become more intense as fossil-fuels become more expensive, jobs whither away and economic growth stalls.

How this plays out depends on a number of factors. I think it will depend on a nation's own cultural background and social fabric. Suffice it to say, places like Denmark and Japan will fare far better than places like Russia or the United States. But I think we'll be seeing a lot more nations fail in the years ahead.

Friday, May 25, 2012

Absolutely fascinating article on BBC news today from historian Michael Wood on the similarities between the fall of Roman Britain and the decline of the Western Roman Empire and today. A must-read. First he gives a historical overview of what collapse was like in Roman Britain:

If people were still there they weren't using coins, or wheel-made pottery, and they certainly weren't shopping for luxuries. As Dr Carenza Lewis of Cambridge University puts it: "It's almost wiped out - as far as the pottery goes you could hold post-Roman Long Melford in your hand - with a bag of chips!" By the early 5th Century in Britain, currency stopped being used altogether. "It became a century of make do and mend," says archaeologist Peter Liddle on Burrough Hill in Leicestershire.

Some towns survived - Carlisle for example still had a town council and a working aqueduct in the 7th Century - but in most of them, with the rubbish piled up in the streets and the civic buildings left to decay, eventually the people left.

The British went back to an Iron Age rural farming economy. The population declined from its four million peak to maybe only a million, devastated by the great plagues, famines and climate crises of the 500s. In the countryside life went on, but with barter and self-sufficiency, out of which, building from the bottom, our medieval and modern societies eventually emerged.

... history tells us that complex societies do collapse. And the great constant, along with climate and economic forces, is human nature. Societies, then and now, are made by people, and they are often brought down by people. Rome in the 4th Century had been a great power defended by a huge army. A century later the power and the army had gone. Instead the West was ruled by new barbarian elites, Angles and Saxons, Visigoths and Franks. And nowhere were these changes more dramatic than on the very fringe of the Roman world in Britain.

Then he goes on to draw similarities to today:

Modern historians, though, see it differently, and some of their ideas seem startlingly relevant to us now.

First was the widening gulf between the social classes, rich and poor. When rich and poor start to live completely different lives this leads (then as now) to the poor opting out of the state. All studies today show that society is happier when the gap between rich and poor is reduced. Widen it and you affect the group ethos of society, and also the ability to get things done through tax.

In the Roman West real wealth lay more in land and property than in finance (though there were banks) - but in the 300s the big land-owning aristocrats who often had fantastic wealth, contributed much less money than they had in the past to defence and government. That in turn led as it has today to a "credibility gap" between ordinary people and the bureaucrats and rich people at the top. Not surprisingly then, many people - especially religious groups - tried to opt out altogether.

Other strands in the collapse of the Roman West are more difficult to quantify, but they centre on "group feeling", the glue that keeps society working together towards common goals. Lose that and you get a kind of nervous breakdown in the social order, which leads to what archaeologists call "systems collapse". The British historian Gildas (c 500-570) in his diatribe against contemporary rulers in the early 500s, looking back over the story of the Fall of Roman Britain, lists the military failures, but behind them he speaks bitterly of a loss of nerve and direction, a failure of "group feeling".

Gildas talks about right-wing politicians advocating glibly attractive solutions that appealed to the populace while "any leader who seemed more soft, or who was more inclined to actually tell things as they are, was painted as ruinous to the country and everyone directed their contempt towards him". Gildas also singles out his leaders' sheer ineptitude and bad judgement, recalling some governments and financiers in today's banking crisis.

"Everything our leaders did to try to save the situation ended up having the opposite effect. Society became prey to corrosive quarrels and dissensions, anger towards the rich, and political opportunism was rife that made no distinction between right and wrong."

Another element Gildas saw as being crucial was the major influx of newcomers from the continent - Angles, Saxons and Jutes who had already been employed in the country as security guards, mercenaries, field workers and street cleaners. These people now took advantage of the lack of central order to create small regional sub-Roman kingdoms in eastern Britain. Only ever a minority, nonetheless they would have a tremendous effect on our culture as they were the ancestors of the English and most of us in Britain speak their language today.

And a terrific conclusion:

So, the Roman Empire didn't fall everywhere or all at one time. Indeed you could argue that the last part of the Roman Empire to fall anywhere was Gwynedd in the English conquest of 1282. Standing in Llantwit, the Dark Age stones testify to the long, slow, almost imperceptible process of change in history, by which one world becomes another. Rome wasn't built in a day and it didn't fall in a day either. Its shadow still falls on us, a memory imprinted almost like genetic information, a memory to which we all belong.

I love everything Michael Wood does. He has my dream job. I remember watching his In Search of Alexander The Great as a little kid; I'm sure it influenced my love of history and far-away exotic places (if only I ever get to see them...)

I've drawn similar parallels in the past, most notably here and here, where I wrote:

Imagine life for an average citizen in the provinces during the sunset
of the Roman Empire. One day the Roman soldiers are pulled back from
the fort defending your town due to lack of manpower. The harvests are
smaller due to soil exhaustion and lack of rain. The ceramic and metal
goods are a little bit shoddier every year, and the quality of building
bricks declines. The baths run out of wood for heating, and the arena
shuts down for lack of funds. The ships fail to arrive on time with
amphoras full of olive oil, and the only blacksmith has left town.
Stone buildings crumble for lack of maintenance, replaced by cheaper
wooden ones. Administrators stop doing their jobs, and people stopped
listening to their edicts or paying taxes long ago anyway. Over time,
the Empire slowly decays from the far-flung outer regions in towards the
center. It's like watching ice freeze - it seems like nothing special
is happening. Only when you compare the beginning and end states do you
realize the drama of what has occurred. Eventually, the new state just
becomes "the new normal."

Greece may be on Europe’s periphery today, but in the 12th century Constantinople was the gateway to a lucrative trade in spices, silks and luxury goods coming from the east. This trade had made fortunes for men across Europe — as the economies of Greece, Spain, Portugal and Italy have done over the last two decades.

Traders from places like Venice, Genoa and Pisa in the late 12th century managed to win for themselves the sort of advantages and loopholes in Constantinople that bright young fund managers would kill for today: they negotiated positions that allowed them to undercut local traders, alongside smart commercial treaties that let them minimize or even sidestep their taxes. As with modern Greece, this led to a flow of cheap foreign capital into the markets.

Around 1200, though, things went sour. A sharp contraction of trade in the Byzantine Empire was exacerbated by wild overspending by Venice, the medieval equivalent of a European central bank.

Almost overnight there was a switch from the easy money, where everyone was a winner, to the dark arts of debt collecting. As with Athens since the financial crisis took hold, it became clear that no one would take responsibility for lending too much, for basing forecasts on only best-case scenarios.

Someone would have to cover the losses, and Venetian merchants were adamant that it would not be them. Constantinople and the Greek-speaking empire, riven by internal divisions, was the obvious mark.

Eventually, one of the rival factions in Constantinople offered a deal with Venice: in exchange for covering the Most Serene Republic’s losses, the faction would receive Venetian military muscle to secure its claim on the Byzantine throne. Venice jumped at the deal.

But Constantinople had vastly underestimated the size of its new debt obligations — and overestimated the stabilizing effect of Venetian arms. Financial obligations mounted abroad, while political paralysis deepened at home.

Everyone from the pope to the kings of Europe knew about the pressure building against Constantinople. One Western delegation after another told the Greeks to get their act together — or, to put it more bluntly, to pay up. The crusaders, under the sway of Venice, lay siege to the city.

Eventually, the Westerners had enough of the procrastination. Seizing their chance, the knights stormed Constantinople. What happened next was a disgrace: the prize assets of the empire were looted at will, seized as collateral by a mob that behaved with no concern for the city’s inhabitants, its culture or its history.

According to one account, prostitutes danced on the altar of St. Sophia, the most beautiful church in the whole of Christendom. Palaces, gardens and holy places were ransacked, with treasures taken off by the cartload. The great collections of relics held in the imperial capital were seized by the Westerners to adorn cathedrals and churches across Western Europe; to this day four bronze horses, stolen from the hippodrome of Constantinople, stand atop the Cathedral of St. Mark in Venice.

Judging the Greeks fiscally and politically incompetent, the conquerors appointed a regent. Baldwin of Flanders, crowned emperor of Constantinople in 1204, was a classic I.M.F.-style appointee: a safe pair of hands, someone with whom other Western leaders could do business.

Meanwhile, the noblemen leading the Crusade, many of whom had brought ruin in the first place with their reckless promises, took control of whole areas of the city and empire for themselves — a classic case of getting in at rock bottom. (So keep an eye on those bankers and their villas in the Aegean; you don’t need to be a historian to know it is a buyers’ market.) The new Latin Empire of Constantinople lasted just 50 years before the Greeks returned to power.

Thursday, May 24, 2012

We've covered the continuing transformation of capitalist democracy to a totalitarian state many times here - something we've called authoritarian capitalism. To keep the capitalist project going as living standards start to fall and profits shrink, increasingly drastic measures to keep the citizenry in line must be taken, just as they were when communism started to fail. I use this term for a couple of reasons - one to point out that authoritarian repression is just as possible under a capitalist economic system as it was under a state-controlled economy (some would say more so), and to point out that China is now not only the model for the new economy, but for the future world political order (unelected oligarchies beholden to the financial class with no limits or checks on their power). The latest example is a truncheon law being passed hurriedly in Canada to whip Montreal protesters in line. This is used in combination with "kettling" tactics in an increasingly draconian crackdown north of the border in supposedly "enlightened" Canada.

More and more people are starting to take notice. My colleague Bill Hicks did a two part post on some of the historical aspects of the Nazi regime that are often forgotten:

Though obviously much shorter lived, the German empire built by the Nazis followed a trajectory very similar to our own. Germany in the 1930s went through a period of rapid expansion not all that dissimilar to how America aggressively conquered a continent and then began expanding its reach overseas. The amount of physical territory acquired by Germany didn’t actually peak until 1942, at the time of its greatest advance on the eastern front but well beyond the point where its battlefield successes were going to be sustainable in the long run. Likewise, America’s “Operation Barbarossa” moment came in the wake of 9/11 when the Bush administration decided to double down on America’s planetary hegemony by launching two wars of choice in the Middle East while simultaneously expanding both our military presence around the globe and the national security state here at home. Ten years later, the national debt has nearly tripled in size and we have already passed the point where our “successes” at expanding the reach of the empire during the War on Terror will be sustainable in the long run.

The lesson here is again fairly simple: governments become more repressive during times of national crisis, and that repression increases as the situation becomes more desperate. Looking back at some of the greatest assaults on individual liberties throughout American history—the Alien and Sedition Acts in the late 1790s, the suspension of Habeas Corpus during the Civil War, the imprisonment of antiwar protestors during World War I, the Palmer raids during the first wave of Red scares, the internment of Japanese-Americans during World War II, the McCarthy hearings early in the Cold War, the Kent State shootings when the Vietnam War had become a hopeless quagmire and waterboarding, rendition, and warrantless wiretapping during the “War” on Terror—shows that they all occurred at a time when America was either actively at war or feared it was about to be attacked.

The fact is, if you were a non-Nazi “Good German” during this time—law abiding, able bodied, willing to work and not too vociferous in your complaints about the nation’s leadership—the first seven years or so of Hitler’s rule must have seemed like a glorious time to be alive. Even after Hitler launched the war and chronic shortages of nearly every consumer good became endemic, for awhile you could at least take national pride in the seemingly never ending stream of German military successes. In fact, unless you were one of the unlucky souls slogging it out in the brutal combat of the eastern front, it was only after the defeat at Stalingrad and the appearance of American and Royal Air Force bombers overhead with relentless regularity that your quality of life really began to suffer.

People think of fascism as just a man with a silly mustache. Because of their compartmentalized thinking, they cannot accept the tell-tale signs when they are wrapped in pro-America rhetoric. Simply put, people supported Hitler because in the short run things were better, he had the backing of wealthy industrialists, and they were the finest masters of twisting manipulating people's passions the world had yet seen at that point.

Morris Berman has an excellent post in the same vein documenting many of the things we've been talking about here. I urge you to read it in its entirety. He documents six major areas of creeping authoritarianism:

I. The creation of a political climate in which the police are out of control, arbitrarily free to intimidate anyone for virtually anything.

II. The persecution of whistleblowers, protesters, and dissenters

III. The dramatic expansion of the surveillance of American citizens on the part of the National Security Agency (NSA)

IV. The corruption of the judicial system by means of show trials of Muslim activists

V. The construction of political detention centers, also known as Communication Management Units (CMU’s)

VI. The shredding of the Bill of Rights by means of the National Defense Authorization Act.

Some of his points:

In June 2011 the sheriff of Nelson County, North Dakota, called in a Predator B drone from the local Air Force base to capture three men who had stolen some cows. Once the unmanned aircraft located the suspects, police rushed in to make the first known arrests of U.S. citizens with the help of a Predator spy drone. It turns out that predator drones are frequently used for domestic investigations all over the U.S.—by the FBI, the Drug Enforcement Administration, and by state and local law enforcement officials.

At the height of its insanity, the Stasi in East Germany was spying on 1 out of 7 citizens. The U.S. is now spying on 7 out of 7.

The NDAA, also known as the “indefinite detention bill,” was signed into law by President Obama on 31 December 2011. It has no temporal or geographic limitations, and can be used by Mr. Obama or any future president to military detain U.S. citizens. As in pre-Magna Carta days, you can simply be swept up and put away forever—disappeared—with no explanation of why, no right to call a lawyer or anybody else, and no right to a trial. You can actually be tortured to death, if the government decides it is in the national interest. The NDAA is probably the greatest rollback of civil liberties in the history of the United States.

The bottom line, of course, is that if you destroy the judicial system, then finally nobody is safe. The government could wind up railroading anyone they don’t like, and I very much doubt that this possibility is far-fetched. First they came for the Muslims...

Where do the suspected Muslim terrorists go? It turns out that the government is using secret prison facilities to house inmates accused of non-violent activities, i.e. of allegedly being tied to terrorist groups. As it turns out, these are not just Muslim groups; the CMU’s are also being used to house environmental activists.

Just as an aside, there are, in general, more people under “correctional supervision” in America than there were in the Russian gulag under Stalin, at its height. Writing in the New Yorker on 30 January 2012, Adam Gopnik declared: “Mass incarceration on a scale almost unexampled in human history is a fundamental fact of our country today.”

Berman concludes:

This leads me to my final point. The distinctive characteristic of American democracy, from 1776, was the protection of the individual and the preservation of individual rights. That no longer exists. Anyone is a potential terrorist now; anyone can be persecuted, prosecuted, and in effect, destroyed. Democracy is only possible if dissent is not only permitted, but also respected. This too is finished. What does this mean for someone such as myself?, is something I lay awake nights thinking about. I have published three books, and half a collection of essays, showing where we have gone wrong, predicting our eventual collapse—indeed, this repression is part of that collapse—and arguing that the U.S. no longer has a moral compass; that it is spiritually bankrupt. I run a blog that is anything but polite: it says the U.S. is finished; that it is basically a corporate plutocracy, run by a gangster elite; that the American people are basically morons, with little more than fried rice in their heads; and that anyone with half a brain and the means to do so should emigrate before it’s too late. I’m not really a threat to the U.S. government, largely because I am not a political activist and because it’s not likely that more than 74 people out of 311 million regularly read my blog (it’s probably more like 24, in fact). But as the definition of terrorism widens in this country, what is to prevent the creation of a category known as “intellectual terrorism” from arising, and putting folks like myself in that category? What is to prevent the government from calling such activity a clear and present danger to national security? As must be obvious by now, the government can do anything it wants to now; as in Nazi Germany, we now have a government of men, not of laws. Indeed, the “laws” are little more than a pretext for whatever the government wishes to do.

-When a country puts laws such as torture or indefinite detention or arbitrary assassination on the books, sooner or later it will use these legal instruments. They won’t just lie dormant, in other words. As in the case of technology, once the mechanisms are there, the temptation to employ them simply becomes too great to resist. That is what is happening today.

-In a world that is politically construed along Manichaean lines—which, as I have argued elsewhere, America has been doing since Day 1—the first line of attack is against the enemy outside. It doesn’t matter if we are talking about Protestants or Catholics or al-Qaeda operatives or infidels of any kind, the first order of business is to go to war with them. But as the British anthropologist Mary Douglas shows in her book Purity and Danger, or Norman Cohn demonstrates in The Pursuit of the Millennium, if the war goes on long enough, inevitably the enemy is also seen to be a fifth column, i.e. within the walls of the body politic itself. They become Huguenots or Marrano Jews or heretics of whatever stripe, and as in the case of Goya’s famous painting, Saturn Devouring His Son, the country begins to eat itself alive. Everybody becomes an enemy; no one is safe any longer. And so I believe that I, and you, really do have reason to worry.

Some have argued that this present "war on women" is a war against progressivism – or a war against feminism, in particular. I would say, looking at the big picture, that it is more serious than that – not that those options are not plenty serious enough. I would say that the call for transvaginal probes, for gagging medical providers, for sending the state to shake a finger for an extra 72 hours at a distressed woman and stand between her and the discussion she is having with her inner-most and private conscience, is all part of the larger crackdown we see on privacy, private space, freedom and personal choice.

It is on the same spectrum of control: the will to gag Bradley Manning or Julian Assange also seek to gag a medical provider in South Dakota. The same impulse to peer into personal emails and listen to private phone calls that has led the NSA to pour billions into surveillance stations in Utah, is the same impulse of panopticon state control that wants to get between the sheets of men and women in consensual sexual decision-making, and monitor or restrict their access to condoms and contraception. And it is the same Big Brother impulse for control that maintains that what a woman does with her own care-provider is a function of state management.

But in fact, the bigger crackdown shows us that it is merely the genderized manifestation of state control. This impulse to mediate and regulate personal choices has been inflamed, I would argue, not by women being particularly uppity – but by people being uppity. The awakening of protesting and demanding behavior of Occupy communities and of Ron Paul supporters, of the unions in Wisconsin, and the students in Montreal, and the rebellious Greeks in Athens, has made the gatekeepers seek every kind of method of control available to them.

If Germany, one of the most intelligent and literate places on earth, with multiple newspapers and an educated citizenry could not hold off fascism, then how can America, full of cranks, charlatans, opportunists, and zealots, seething with poverty and racial tension, where most people have no access to any information outside of Fox News, and with no essential cultural connections binding us together, hold off the tide?

I'm surprised, given his recitation of the rollback of civil rights for Jews, Berman did not point out that the exact same things are being done in the United States today using homosexuals as scapegoats. Numerous states have taken the time to take legislative action to strip civil rights from gays (while simultaneously ignoring more pressing issues like mass unemployment and deteriorating infrastructure). And now the corn-pone Nazis are now openly calling for homosexuals to be rounded up into concentration camps and murdered, every last one. Please watch the following, and feel a chill go up your spine:

Laugh and dismiss these clowns all you like. That's exactly what they did with Hitler and his reprobate followers early on too. Who had the last laugh there?